Hoban Construction wants a valuation of approximately 300 billion won ($258 million) for its golf course Sky Valley Country Club (CC), higher than recent transactions in the market, with some industry insiders describing the price as “too high”.  

Samil PwC, which is handling the sale for Hoban Construction, received letters of intent on September 18, industry sources said on Tuesday (September 22).

Hoban Construction is reportedly seeking a valuation of 8.3 billion won per hole, which is 1.5 billion won higher than the record price set by Club Mow CC in August. Doosan Heavy Industries & Construction sold Club Mow CC to Moa Construction for 185 billion won, or 6.8 billion won per hole. 

The value of real estate, including golf clubs, is calculated according to cashflow, while a course’s proximity to the Seoul metropolitan area, which directly affects the number of players, also has an impact.

Sky Valley CC is a 36-hole golf club, consisting of an 18-hole private course and an 18-hole public course. The public golf course has recently attracted a lot of players, pushing up the club’s valuation, but the private course has a weak cash-generating capability compared to its size.

The club’s proximity to the Seoul metropolitan area may not be considered an advantage either. “Golf courses that are easy to access from all areas of the country will be granted a premium, but otherwise the value is discounted,” said an industry source. “It is uncertain whether Sky Valley CC would be able to get premium for its location of Yeoju, Gyeonggi Province.”

Multiple strategic investors and financial investors have reportedly participated in the first round of bidding for Sky Valley CC, but the source said it was difficult to predict how many of them would be able to meet Hoban Construction’s expectations. (Reporting by Byung-yoon Kim)